Albertans are intimately familiar with boom and bust. It is endemic in the oil patch, and it cycles with similar brutality in swine production. 
It should come as no surprise then that despite exceptional profitability in recent weeks – Western Hog Exchange reports margins ranging from $40 to $70 per pig at Olymel during the second week in May – an Alberta-led move to push packers for a healthier model continues to gather support across the Prairies. 
Andy Waldner at Spring Side Hutterite Colony in Southeastern Alberta cut back his breeding program on January 18. That means a reduction in the number of hogs he has available for delivery starting in October. Waldner will continue at lowered production until the packers offer a pricing formula comparable to the legislated package in Quebec, including a fair share of the cutout and transparency in how payments are calculated. 
Waldner is among a group of six Hutterite and independent producers who, with guidance and advice from Western Hog Exchange(WHE), organized a strategy to cut back production as a means of forcing packers to negotiate. They want a deal that lines up with Quebec, where pricing is based on 100 per cent of the cutout and producer margins rise and fall in parallel with packer profits. 
While some have pointed out that Olymel is currently offering the best package, Waldner counters that four of the original six producers are regular suppliers to the Red Deer plant. In the weeks that have passed since those six producers started cutting back, their ranks have been swelling, including some who had already been manipulating their herds so that they would not have to lose as much money shipping hogs at negative margins during the low side of the annual cycle. Waldner estimates that, as of mid-May, their group had grown to more than a dozen with interest growing from producers in Saskatchewan and Manitoba. 
WHE held a virtual conference earlier this year with Saskatchewan and Manitoba producers to talk about production reduction and the potential impact on pricing formulas. A meeting set up for 15-30 people over two hours drew more than 50 and lasted almost twice as long because people were so deeply engaged, says Brent Bushell, WHE’s executive director and a primary force in the strategy. 
Whether the processing industry leaders are aware of or appreciate the new realities for Prairie producers, plants that are already running with empty shackles face an even greater shortfall as this strategy starts to take effect. Rather than stimulating renovation and expansion, extraordinary profits may encourage more producers to shut their operations down for good, says Waldner. 
“If (packers) keep paying what they’re paying, we’re done,” he said in a conversation with Prairie Hog Country late in May. 
“Guys are not looking at these high pig prices as, ‘Now is the time to expand.’ Guys are looking this going, ‘We’ve seen this before. I’m not expanding. I know the broken formula will come back in the winter months. This is the perfect time to get out.’” 
Packers ignore the producer strategy at their peril said Bushell and Alberta Pork Chair Brent Moen, who also sits on the WHE board. 

“We can (fix the pricing formula) now, or we can simply watch it devastate over the next five or 10 years and we’ll all have nothing,” Bushell said in conversation with Prairie Hog Country. 
“At the end of the day, industry will adapt and change, but what it looks like in 10 years depends on what packers do in three.” 
Moen says producers cannot continue losing money “simply for the pleasure of doing business.” 
The spike in 2014 put a lot of money into producers’ pockets. But that money disappeared over the next five years, and producers have been running on margins that averaged negative two per cent over the last 20 years, he says. 
“Seven years ago, we had a good run. In 2021, we’re having a good run. But our barn footprint is seven years older. Farmers are faced with the fact that, in a few more years, we’re mandated to move from gestation crates to open housing. I support that, but when you make that change, it costs you money. 
“So now you’ve got producers who are looking at it and saying, ‘You know what, if history repeats itself, I have to look at, number one, investing a whole bunch of money to upgrade my barn, potentially putting that money back in use and barely breaking even. My barn is getting older and getting worn out; maybe it’s a good time to call it a day.’” 
Adding incentive to shutting down while prices spike is the doubling in value of cull sows, says Moen. Sows that were worth about $150 each are now fetching $300 or better, he says. 
Within Alberta Hutterite communities, where the pig barn was once the first structure erected on a new site, it is now the last if it’s built at all, says Moen. 
Throughout the province, new hog barns are rare and the industry continues to see more producers exit than enter, he says. 
“All of those things really point to some huge considerations, huge implications for the future of the industry, with the exception of the integrators who continue to try to expand their operations. 
“That’s my message to the packers: If you cut off your supply chain, whether you like it or not, over time it’s going to make you less profitable.” 
Bushell expressed similar concern for the future if packers continue to ignore the message coming from the farms that supply their production lines. Certainly, there are company-owned barns to help ensure some supply, he says.

He added, but those barns operate at a higher cost of production than producer-owned barns and do not necessarily meet the same high standards as that of a producer who is competing for premiums. 
“We spent two or three years trying to work with packers to see this. Now the ball is in their court,” said Bushell. 
“Producers are taking off the blinders and the earmuffs and they’re learning the industry. Packers have lost hogs and they’re going to continue to lose hogs. Their position has weakened.” 
Bushell says he is optimistic that the industry will turn around but predicts that one federally-inspected plant will find itself in financial trouble by the end of the year. He believes that, if Maple Leaf cannot get enough hogs to fill the lines in Lethbridge, it will shut that plant down and divert to Brandon. One less plant in the West means more hogs for those that remain, he says, with devastating results for the people they employ, the jobs that spin off and the communities in which they operate. That trend will continue until the packers decide they want to build the industry. 
“What packers haven’t realized yet, is if I succeed, they win. I’m pushing for money for you so that you have a supply of hogs.” 
The trend for packers to wait for a call from WHE has already turned around, with packers asking WHE to source hogs, says Bushell. 
“Today, I’m stronger than I was yesterday as an organization. I may win and I’m prepared to lose, but I will never yield,” he said. 
Waldner urges producers who would like to learn more about production reduction to contact the WHE for details and connections. Information seminars are on hold for now, but will resume once seeding is complete and producers have time meet and talk. 
At this point in time, some of the producers who are shutting down have kept their intentions to themselves, says Waldner. Those who have opted for production reduction are prepared to ramp up once they have the deal they need. But it will take 280 days before those additional pigs start showing up at the plants, he says. 
“With production reduction, once the packers wake up and see that a bunch of guys have left the industry – and a lot are keeping it secret – then they’re going to think about the group that has hogs available in 280 days. We’ve told (the packers) what it will take, so with us doing what we’re doing, we’re actually doing the packers a favour. We’re not going out for good. We’re reducing producing and giving them a chance to set the table for producers to restart.” •
— By Brenda Kossowan